Insurers and reinsurers must ditch “arbitrary” exclusions that cut Ukraine from policies and resume cover to support the war-torn country’s economic recovery, the world’s two biggest insurance brokers have said.
New York-listed rivals Aon and Marsh McLennan said blanket exclusions of Ukraine from policies covering everything from soured loans to property damage, which were put in place after Russia’s full-scale invasion in February 2022, “ignore the diversity of risk throughout the country”.
In a rare joint call, they pushed for a reversal of the insurance and reinsurance industry’s moves to lump Ukraine alongside Belarus and Russia in exclusions from broad reinsurance contracts, limiting the supply of primary insurance and “impeding” Kyiv’s economic recovery.
The exclusions were part of a market pullback as insurers and reinsurers braced for billions of dollars of losses from destroyed buildings, stranded planes and other damage caused by Russia’s invasion. But Kyiv’s leaders and western allies have repeatedly highlighted the importance of the insurance sector to underpin its economy and enable the huge investment that will be needed for its post-war reconstruction.
John Doyle, chief executive at Marsh McLennan, said the groups were calling on the global insurance sector — which is gathering in Monaco for its annual Rendez-Vous conference — to “end blanket exclusions for Ukraine” and support the country to attract global investment.
Aon chief executive Greg Case said insurers must “work to strengthen” insurance initiatives already being developed, adding: “Insurance capital is essential for the reconstruction of Ukraine’s healthcare, energy and agricultural sectors.”
Insurance brokers negotiate with insurers to cover their clients’ assets, from supertankers to credit facilities, against potential losses, with a group of individual insurers typically providing a slice of the cover. Aon and Marsh also have big reinsurance broking operations that help primary insurers share their risks with reinsurers.
With almost all of Ukraine’s revenue allocated to its armed forces and its deficit continuing to rise, its leaders have sought insurance schemes as a way to increase trade and investment.
Both firms have been involved in projects seeking to draw some global insurers back into certain areas of Ukraine’s economy.
Last year, Marsh McLennan reached agreement with Kyiv to provide affordable cover to ships carrying grain from its Black Sea ports. This year, Aon unveiled a scheme with a US development agency that was intended to cover Ukrainian businesses against war risks.
Broader appetite among insurers to underwrite Ukraine risks remains minimal, however.
Ukraine’s economy recovered from a 29 per cent drop in its GDP in 2022, to grow just under 5 per cent in 2023. But GDP growth is expected to slow to 3.2 per cent this year, according to the World Bank.
In the joint statement, Aon and Marsh said that “arbitrary exclusions for Ukraine contribute to confusion about the vastly different levels of risk in the country”, highlighting central and western areas where there is much less war damage.
Additional reporting by Isobel Koshiw in Kyiv
